A global pharmaceutical company offers defined-benefit plans to its employees. The following table presents select data about Eli Lilly€™s defined-benefits pension plan. Eli Lilly reports under U.S. GAAP. Use this information to answer the questions that follow regarding Eli Lilly€™s defined-benefits pension plan, including its pension costs and liability.

a. What is Eli Lilly€™s pension cost in 2013, 2012, and 2011? What are the components of its pension cost? What are pension costs after taxes as a percentage of net income? Comment on any changes in pension costs as a percentage of net income. Consider the growth in net income compared to the growth in pension costs after taxes. Assume a 35% tax rate.
b. What is the funded status of Eli Lilly€™s defined- benefit pension plans in 2013, 2012, and 2011? How has the funded status changed over time? What is the percent of the net pension liability to total liabilities in 2013, 2012, and 2011?
c. How have the settlement rate and expected return on plan assets changed from 2013 to 2012? How does the change in the settlement rate affect the pension obligation and pension cost? How does the change in the expected return on plan assets affect the pension cost?
d. If Eli Lilly had reported all actuarial gains and losses in net income rather than other comprehensive income, what would its pension cost have been in 2013, 2012, and 2011? Comment on the changes in its pension cost.
e. From Example 19.27 in the text, compare pensions at Eli Lilly to Johnson & Johnson­. Specifically, compare the pension costs as a percentage of net income and the net pension obligation as a percentage of liabilities.

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At December 31, or for the year ended December 31 (Dollars in millions) Pension Accounts (select) Pension Benefit Obligation Plan Assets 2013 2012 2011 S 9,976.4 9,481.7 $10,423.8 S 9,191.2 7186.3 8,286.6 Pension Cost Service cost Interest cost Expected return on plan assets Amortization of prior service costs Recognizad actuarial losses Net periodic benefit cost Pension-related Other Comprehensive Income Actuarial gain (lossi amortization during period Actuarial gain (oss) - current year Assumptions Settlement idiscount) rate Return on plan assets Other Financial Statement Information Total Assets Total Liabilities Net Income S 2871 4372 (701.9) 3.7 414.7 s 253. 236.3 4479 (685.9) 8.6 200.4 455.1 (684.8) 4.2 285.7 S 414.7 (295.7) S200.4 1,234.7 (598.9) (1,266.0) 4.9% 4.3% 43% 5.0% 5.0% 5.6% $35,248.7 34,398.9 $33,659.8 11,193.3 4,3477 17608.0 4,684.8 11,235.5 4,088.6